A senior Labour source said: “The single market is not a membership club that can be joined so we seek through negotiation to retain the benefits of the single market.

“As he said in his letter back to Ian Blackford, the summit rests on the falsehood that the single market is a membership organisation which you can join, which it is not. Our approach for a jobs-first Brexit, which involves retaining the benefits of the single market, is through negotiation with the EU.”

His comments prompted frustration from some pro-EU MPs in the meeting, who believed that Corbyn had been persuaded to keep the door open to staying in the single market for longer than the transitional period after Brexit.

One Labour MP said: “The key thing is about keeping all the options on the table when it comes to the single market and customs union. It is clear from recent polling that an overwhelming majority of Labour members, supporters and voters believe this.”

Corbyn explained to his MPs and peers that Labour would now be embarking on a fresh push to prepare for government. His shadow ministers will have meetings to discuss policy and strategy over the next week and are not expected to be subjected to a reshuffle.

“This weak and struggling government is causing untold damage – and we need to replace it as soon as is possible,” he told the parliamentary party. “So, as I said in my new year message, we are staking out the new centre ground, as a government in waiting.”

He signalled Labour’s intention to keep up the pressure on the government on domestic policy issues, while branding May’s reshuffle as “a pointless and lacklustre PR exercise”.

“We’re not only seeing growing problems across the NHS; the cost of travel is going up; our social security system is being dismantled; our housing crisis has been cruelly exposed by the terrible Grenfell fire, and by the Conservatives in Windsor who want to sweep rough sleepers from the streets and the government’s threat to jobs and living standards from its chaotic Brexit negotiations,” he said.